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Looming Challenge for Japan

There are two important developments in Japan that may be lost in the shuffle between the heightened uncertainty in Europe now that Italian voters appear to have rejected Brussels/Monti austerity and the US self-inflicted sequester.
The first is that deflationary forces have tightened their grip on the world's third largest economy. The second are the weekly portfolio flows that warn that the old recycling problem may be back.
Japan reported inflation fell for the 8th time in 9 months in January. Headline CPI has fallen 0.3% year-over-year. It had finished 2012 0.1% below year ago levels.
Tokyo's CPI for February was ... (full story)